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business.
As of March 12, the net FX position of the government-run trio of banks, namely Ziraat, Vakifbank and Halkbank, stood at $145mn. This figure was in negative territory at as high as $12bn in August 2020.
How short the state banks are planning to go now is questionable.
At the central bank, there was $92bn worth of gross international assets, including $39bn worth of gold and $53bn worth of FX, as of March 12. Net reserves remain in deep negative territory when swap liabilities are taken out.
The central bank also sells USD/TRY future contracts on Borsa Istanbul’s derivatives market (VIOP). Its short position stock stood at $986mn as of March 12. This figure was as high as high as $8bn in 2018.
On March 22, Borsa Istanbul hiked the upper limit on currency futures at the VIOP to 20% from 10%, asking higher margins to short Turkish lira.
According to the central bank’s latest international investment report, Turkey’s banks officially had $39bn worth of reserves in addition to the central bank’s $96bn, bringing the total in the Turkish financial system to $134bn, including $92bn in FX and $42bn in gold.
Overall figures on the available FX and gold in the Turkish financial system show an amount equivalent to what the government has burnt through since the beginning of 2019.
How much of the reserves are usable is another question that needs addressing.
“Our conservative estimate suggests about $30bn could be cobbled together for a lira defence,” Eurasia Group said on March 20 in a note.
“They have USD92bn in gross reserves, including USD38bn in gold. People say only USD20-25bn is freely available, but the USD38bn in gold reserves can be mortgaged to make it liquid,” Ash wrote in an emailed note to investors.
When it comes to financial markets and the destiny of exposed markets, history never gets bored of repeating itself. There are indeed centuries-long vicious cycles.
9 TURKEY Country Report April 2021 www.intellinews.com